Now that Steve Wynn is gone from the company, a pair of Wall Street analysts sees a buying opportunity for Wynn Resorts, Limited (NASDAQ: WYNN) investors ahead of a potential buyout or breakup of the company.

Overhang Removed

The Analyst

Union Gaming analyst John DeCree upgraded Wynn from Hold to Buy and raised his price target for the stock from $175 to $205.

The Thesis

According to DeCree, Wynn’s departure has eliminated the risk of regulatory and legal investigations related to Steve Wynn’s alleged sexual misconduct while at the company.

In addition, Galaxy Entertainment recently took a 4.9 percent stake in Wynn, a move which DeCree said served to both raise cash for Wynn’s $2.4 billion settlement with Universal Entertainment and help secure its upcoming Macau license renewal.

“With Galaxy (a Chinese company and existing concessionaire in Macau) now a notable shareholder of Wynn, we believe this risk is at least partially mitigated for now,” DeCree said.

At this point, with legal and regulatory woes behind the company, DeCree sees a path for a potential sale or breakup of the company. If Galaxy is in the market as a potential buyer, he says Galaxy would likely only be interested in Wynn’s Asian assets, leaving its Las Vegas and Boston properties up for grabs.

DeCree said MGM Resorts International (NYSE: MGM), Las Vegas Sands Corp. (NYSE: LVS) and Caesars Entertainment would likely all be interested in Wynn’s U.S. assets.

DeCree also said Galaxy would likely only target Wynn Palace, which could mean that Wynn Macau could go to SJM or MGM.

Price Appreciation May Be Limited

The sale of Steve Wynn's remaining stake in the company to institutional insiders coupled with the Universal payment is good news for long-term investors, Wieczynski said.

"Wynn picks up a valuable, long-term investor in Galaxy, removes the “Steve Wynn” overhang by eliminating him as a shareholder and essentially has helped clear the deck with regards to getting certain gaming regulators off their backs," Wieczynski said.

Still, while Wieczynski says a buyout could generate significant upside for Wynn from currentl levels, the recent deals suggest price appreciation may be limited in the near-term. With Steve Wynn selling his shares at $180 and Galaxy buying at $175, Wieczynski said he doesn't see the stock getting back above $190 anytime soon unless an M&A deal is announced.